Digital Edition

Absence and Disability Forecast

Terri L. Rhodes is CEO of the Disability Management Employer Coalition. Terri was an Absence and Disability Management Consultant for Mercer, and also served as Director of Absence and Disability for Health Net and Corporate IDM Program Manager for Abbott Laboratories.

Each year, I write about the trends and forecasts I see coming for the absence and disability management field for the upcoming year. This year’s forecast complements the trends I highlighted for 2017. As predicted, we did not see much change, if any, in leave laws at the federal level in 2017; however, we continued to see paid family and sick leave regulation at the state and municipal levels. We did see some traction on the Americans with Disabilities Act (ADA) with the Severson v. Heartland Woodcraft, Inc. case, but unless more courts rule in the same way, this case likely won’t be a game changer.

Here are the four trends I predict we’ll continue to see in 2018.

Paid Family Leave

Attracting and retaining the best talent continues to be top of mind for organizations, so more employers will offer paid family leave for competitive reasons and because of state and local regulations. We could also see a boost from the recently signed federal tax bill. Employers can receive a partial tax credit for wage benefits paid to employees during leave taken under the FMLA and other specified reasons. The provision of the tax law has numerous conditions and only lasts through 2019 unless renewed by Congress, but it could encourage the private sector trend toward more and richer paid leave.

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State and local governments will continue to expand mandated leave in 2018. Two examples are New York and Washington. Starting on Jan. 1, New York employees who meet time-on-the-job requirements can receive eight weeks of paid leave. This leave entitlement increases to 12 weeks in 2021.

Starting in 2020, Washington will be taking another run at mandated paid family leave and will be the fifth state in the nation to offer paid family and medical leave benefits to workers and employers. The program, which promises to be the most generous, will be funded by premiums paid by both employees and employers and will be administered by the Employment Security Department (ESD).

We think other state and local governments will follow Washington State’s lead to add or enhance mandated leave.

Workplace Mental Health

There is a growing understanding at all levels of society that effectively addressing mental health issues is necessary to enhance individual well-being. It’s also becoming clear that effective mental health screening and treatment is important in lowering costs for employers. Depression, stress, and other mental health issues are major concerns for employers as these conditions tend to be in the top three reasons for absence; pregnancy is number one, and musculoskeletal problems is second.

We hope to see less stigma as the year progresses. The good news is that attitudes are changing. Millennials, for example, are much more likely to acknowledge mental health concerns and seek assistance, according to the 2017 DMEC Pulse Survey conducted last fall on workplace mental health. This means stigma attached to mental illness will likely recede. In 2018, more employers will recognize the importance of identifying employees who want to receive assistance and provide them with resources to get their jobs and careers on track.

Strengthened Processes

Many employers have absence management policies and processes in place. Not all are as strong and efficient as they could be. 2018 will see a focus on strengthening them to achieve greater cost savings and more consistent compliance. Technology will play a large role as employers continue to invest in software and other innovations.

Training and education will also take center stage as an avenue to increase performance and productivity. The Certified Leave Management Specialist (CLMS) designation and the new supervisor training for FMLA and ADA, to be released later this year by DMEC, offer easy access to resources for employers and vendors alike. Both employers and employees understand the value in skill building, productivity enhancement, and increased employment opportunities, making these programs a win-win for organizations.

Technology

Artificial Intelligence (AI) is embedded in our lives, whether we like it or not. So, it makes sense that AI has made its way into absence management as well.

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Integrated absence management (IAM) systems have used AI to identify trends and risks that drive absence and disability costs. We need technology to continue to help us streamline work processes, sort data, look for trends, benchmark, and measure the success of our IAM programs. A number of large employers have demonstrated these technologies’ ROI can be significant. There are also a number of software solutions that track and manage absence available to employers who self manage absence, replacing tedious spreadsheets and sticky note reminders.

In 2018, employers and employees will lose some of the fear of AI as a threat that will usher in a job-destroying dystopia. Rather, we will increasingly view human-computer collaboration as a high-touch/high-tech partnership. Data technologies can do the heavy lifting necessary to drive efficiency and lower costs. But only people can show compassion for employees who are on a leave of absence. That’s not only the right thing to do; it’s also the smart thing to do as employees treated with respect and dignity are less likely to look to litigation and other avenues to meet their needs. As AI and other technologies advance in 2018, so will an emphasis on hiring and training for the “soft skills” increasingly valued in every profession.

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How quickly do you want that package you ordered today? Would you rather have it tomorrow, or a week from now?

According to the National Retail Federation, nearly 40 percent of online shoppers expect free two-day delivery, which is no surprise considering the appeal of online shopping lies in its convenience and speed.

But these expectations increase the pressure on wholesale distributors to shorten last-mile delivery timelines. Where warehousing was once a mechanism to store inventory at low cost, it’s now becoming a way to keep products closer to consumers to cut down on delivery lead times and costs.

“This is where urban warehouses come into play,” said Mark Morneau, Senior Vice President and General Manager, National Insurance, East Division, Liberty Mutual Insurance. “By moving into cities and getting products closer to where consumers live, they eliminate some delivery lead time and expense.”

Warehouses in densely-populated areas, however, come with unique risks that suburban or rural warehouses don’t typically need to manage. As wholesale distributors increasingly turn to urban warehousing to meet the demands of e-commerce, risk managers should be aware of these key risks and challenges:

1. Older Properties in Densely-Packed Neighborhoods

Warehousing in an urban setting typically means moving into an older and smaller building than what would be available further outside city limits, which presents many challenges.

“Oftentimes the buildings used are old manufacturing facilities that aren’t designed for extensive storage. So, they need to be brought up to standards suitable for housing products for wholesale distribution,” Morneau said.

That means retrofitting them with standard and code-compliant sprinkler, ventilation, electrical, and alarm systems and reconfiguring the space to properly store and move inventory, which could include raising ceilings, adding racks, and widening loading docks.

“Being much closer to your neighbors also presents risks,” Morneau said. “In densely populated areas, a fire that starts three buildings down can still take out your facility. Older water systems may not supply sufficient water pressure for fire sprinkler systems, so fire pumps may also need to be installed.”

While infrequent, fires can result in total loss without the proper safeguards. Clear emergency response and recovery plans can help mitigate the damage.

2. Premises Security

Fully-stocked warehouses make an attractive target for thieves.

“Urban environments mean more people, which means more potential for crime,” Morneau said. “The logistical realities of urban warehousing also make it more difficult to keep crime out.”

Concentrated areas mean less space for fences and other barriers that limit access. Narrow roadways necessitate smaller delivery trucks which will have to enter and exit the facility more frequently, increasing the opportunities for vandals or thieves to gain entry.

“Your inventory is a critical asset and must be well-secured,” Morneau said.

Around-the-clock security guards and security equipment that includes video surveillance can help to deter thieves, while protocols dictating who can enter the facility and when can help to limit opportunities for criminals.

3. Workforce Safety in Confined Spaces

The tighter floorplans of urban facilities also present safety risks to employees.

“Older facilities with less space won’t have as much automation, which means workers are doing more material handling. That alone increases injury risk,” Morneau said. “Employees are also likely to interface more with forklifts and other machinery, which are also operating in more confined spaces. Whenever people work near this type of machinery, the risk of bodily injury goes up.”

Investing in equipment like conveyer belts and elevators to streamline workflows can help mitigate that risk. Whatever changes are made, thorough safety training for employees is paramount.

4. City Fleet Operations

“A benefit of being in an urban warehouse is access to highways and roads, but larger vehicles can’t navigate as easily in a city environment. With more people, vehicles, and distractions on the part of both pedestrians and drivers today, accidents become much more likely,” Morneau said.

The pressure to meet quick delivery timelines could also lead to overscheduling drivers. Not only could this run afoul of regulations, but it can also lead to driver fatigue and a greater likelihood of accidents.

“Warehouse managers need to determine if they can operate effectively with their current fleet and should also consider city ordinances that may limit hours of business operation or affect parking,” Morneau said.

Distributors may also choose to outsource delivery rather than manage their own fleets. In cities, new sharing economy platforms are taking up this task along with traditional players. But farming out delivery to the sharing economy comes with its own liability challenges.

5. Relying on the Sharing Economy for Delivery

The sharing economy is introducing opportunities for businesses of all types to offer better, faster, and more cost-effective service, and the wholesale sector is no exception.

Wholesalers are finding available vehicles and drivers to deliver inventory to client locations via online transportation marketplaces. In the future, gig workers using their own cars and bikes as delivery vehicles could even help wholesalers get packages directly to consumers’ doorsteps. While these services can help expand distribution operations, they can also introduce general liability risks.

“Risk managers may be exposing their companies to a host of emerging liability issues by using sharing economy platforms because the drivers and fleets are relatively unknown,” Morneau said. “A third party is responsible for verifying drivers and their credentials, backgrounds, and vehicles, but you are trusting them to make deliveries. It’s a much harder situation to control.”

These relationships can offer the benefits of speed, efficiency, and capacity, but contracts with third-party platforms should outline service expectations and clearly delineate which party assumes liability.

Access Risk Management Resources and Comprehensive Coverage

Wholesale distributors are already making use of multistory urban warehouses in Europe and Asia, with a few cropping up in U.S. hubs like San Francisco and New York. The trend is likely to continue as e-commerce keeps growing and consumers keep expecting speedy delivery.

Risk managers can best plan and prepare for the unique exposures associated with urban warehouses by working with well-resourced insurers. Liberty Mutual’s risk control consultants can assess property, safety, and fleet risks and recommend strategies to mitigate them, such as developing a fleet safety program, evaluating a new or existing fire protection system, or reviewing an emergency response plan.

“Our risk control team helps risk managers identify the exposures they’ve overlooked so they can bring down their residual risk and focus on operating their businesses profitably,” Morneau said.

Along with core primary property and casualty products, Liberty Mutual also offers specialty coverages like environmental, cyber, and professional policies through Ironshore, a Liberty Mutual company.

“We have the full suite of products to address urban warehousing exposures and help distributors take advantage of these opportunities,” Morneau said.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Liberty Mutual Insurance. The editorial staff of Risk & Insurance had no role in its preparation.

One of the most difficult phrases to digest without becoming frustrated or judgmental is the oft-repeated, “I never thought that could happen here.”

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Most painfully, we hear it time and time again in the aftermath of the mass school shootings that terrorize this country. Shocked parents and neighbors, viewing the carnage, voice that they can’t believe this happened in their neighborhood.

Not to be mean, but why couldn’t it happen in your neighborhood?

So it is with Black Swans, a phrase describing unforeseen events, made famous by the former trader and acerbic critic of academia Nassim Nicholas Taleb.

We at Risk & Insurance® define these events in insurance terms by saying that they are highly infrequent, yet could cause massive damages. This year, for our annual Black Swan issue, we present two very different scenarios, both of which would leave mass devastation in their wake.

On the topic of whether the volcanic island of La Palma, the most northwestern of the Canary Islands, could erupt, split and trigger an Atlantic mega-tsunami, scientists are divided.

Researchers Steven Ward, a geophysicist at UC Santa Cruz, and Simon Day of University College London, say such a thing could happen. Other scientists say Day and Ward are dead wrong; it’s an impossibility.

One of the counter-arguments is backed up by the statement that there has never been an Atlantic mega-tsunami. It’s never happened before and thus, could never happen here. See exhibit “A” above, re: mass school shootings.

Tens of millions of people died during the Spanish Flu outbreak of 1918.

Why it could happen again includes the fact that it’s happened before. The science on influenzas, which are constantly mutating, also supports just how dangerous a threat they pose to millions of people beyond the reach of antibiotics.

Should a mutating avian flu, for example, spread widely, we could see a 10 percent drop in GDP, mostly from non-physical business interruption.

As always here, the purpose is to do exactly what insurance modelers and underwriters do; no matter how massive the event, we create scenarios, quantify possible losses and discuss risk mitigation strategies. &

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]

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